Wealth in Quebec: a different view

Per capita, there are far fewer rich people in the French-speaking province than in Ontario. A hangover of its cultural history and values, today that lack of affluence is also one of the starkest symptoms of a larger problem

So when the founder of Phoenix International Life Sciences Inc. put the estate up for sale three years ago for $6.9-million, he wasn’t ready for the shock he got. There were no takers.

Some people blame the asking price, saying it was set far too high and wasn’t sufficiently reduced. Others note the location scared away buyers — owning a property off the island of Montreal is frequently a commuting nightmare as traffic congestion rises.

Mr. Hooper finally sold his home this week for $3.4-million, resorting to a rare open auction with no minimum bid. The whole ordeal laid bare a naked truth: There simply aren’t a lot of people in Quebec with the means to afford a mansion. In fact, there simply aren’t a lot of people in Quebec with the means to afford half a mansion.

Per capita, there are far fewer rich people in the French-speaking province than in Ontario. Barely 3.9% of taxpayers earn more than $100,000 a year in Quebec compared to 6.3% in Ontario, according to 2008 revenue department statistics, which are the most recent available. The ranks of the truly monied are even thinner.

A hangover of its cultural history and values, today that lack of affluence is also one of the starkest symptoms of a larger problem. Many Quebecers have a deep distrust of wealth and wealthy people. And some of Quebec’s leading business leaders warn that if that doesn’t change, Canada’s second-largest province will slowly slip into what Montreal writer Alain Dubuc calls “quiet mediocrity” — a kind of non-ambitious lethargy that will hurt not only itself but the rest of the country.

“We in Quebec have succeeded in various things. But we still have a problem with risk-taking and growing,” says Yves-Thomas Dorval, head of the Conseil du Patronat, a group that represents Quebec’s largest employer associations. “We elevate people who like to keep things small. And we decry companies that are becoming big.”

Mr. Dorval is one of a handful of influential actors who have highlighted the difficult relationship Quebecers have with money. He notes that it’s not that Quebecers don’t want to get rich — participation in lotteries netted the province’s gambling corporation $1.8-billion in sales for fiscal 2011, about the same as the previous year — it’s that they just don’t want to take big chances trying to get rich. In addition, they feel more strongly than most other Canadians that wealth should be shared.

He gives the example of senior management salaries. When a chief executive tallies a fat bonus and gets rewarded with stock options while his employees see much smaller compensation gains, that is frequently big news in Quebec’s media outlets.

“People are blaming the fact that this [pay gain] is not shared with everybody,” Mr. Dorval says. “So if you grow, it means automatically you will be seen as not sharing. Which is wrong.”

As for Quebecers’ conservative attitude toward risk, that manifests itself in many ways.

The province has more renters than homeowners compared to the Canadian average, the result, partly, of a desire by Quebecers not to be encumbered with the stresses and hazards of owning property. That in turn is also why Quebecers are less indebted than other Canadians on the basis of debt-to-revenue, recent data from a market research firm Ipsos show.

“They prefer having a low rent than a high mortgage,” said Yves Marceau, senior manager of risk management at National Bank in Montreal. “The thinking that to become rich you have to be a homeowner is [definitely less prominent] in Quebec than in the rest of Canada.”

Shunning risk means Quebec is also losing its entrepreneurial culture.

The province that gave the world Cirque du Soleil and Bombardier Inc., two world-class companies born from the ideas of determined individuals, is now seeing its entrepreneurial drive melt away.

Quebec has the lowest entrepreneurial intensity, as measured by the ratio of business owners and self-employed workers to total employment, when compared to Ontario, British Columbia and Alberta. And that doesn’t appear set to improve, with one recent survey showing only 7% of Quebecers indicating they intend to start a new business or take over an existing business over the next 10 years, compared to a national average of 13%.

More and more Quebecers are choosing the security of a salary from an established employer over the more perilous but potentially more lucrative path of starting a business.

That worries corporate leaders like Mr. Dorval because entrepreneurs are the engine of a society’s wealth and growth, creating jobs and generating tax revenue.

Charles Sirois, chairman of Canadian Imperial Bank of Commerce, and François Legault, a founder of Transat A.T. and former provincial politician, are also sounding the alarm. The two men, partners in a three-month-old venture called the Coalition pour l’avenir du Québec (Coalition for the Future of Quebec), are building support to form a political party to challenge the governing Liberals and opposition Parti Québécois.

In their blueprint for improving the Quebec economy, they say it’s crucial that Quebec create a better policy framework for stoking and securing current and future entrepreneurs. And they say it’s imperative that the province narrow the big gap that exists between the wealth of its citizens and those of its major neighbours. Wealth as calculated by gross domestic product per resident was 12.6% higher in Ontario than Quebec in 2009 and 45.3% higher in the United States.

“An inability to catch up on prosperity increases the risk of an exodus of our brightest young people,” the two men write in a June 1 consultation paper. “And their departure will only make the situation worse.”

So where does this uneasy connection Quebecers have to wealth come from? Some say it is the legacy of a society that was ruled by the Roman Catholic Church until Jean Lesage’s Liberal government broke the grip with a series of secular reforms in the 1960s. The church taught that coveting capital was bad and many Quebecers, whether they personally believe that or not, may still feel that influence.

Others think it’s simply a matter of principles. While many Canadians may rank sense of duty as their top value, Quebecers believe enjoying life is more important. If that means less work and less money, so be it. They are also more egalitarian than many other societies.

All of this doesn’t mean that Quebec’s upper class is dead.

If it were, Tiffany & Co. would not have decided, as it has, to open a new jewellery store in Montreal’s Ritz-Carlton hotel in the fall. It will be its first in the province.

If it were, the number of sales of homes for more than $1-million in Montreal wouldn’t increase by 13%, as it did through the first five months of this year versus last year.

Nor would luxury automaker Rolls-Royce have launched, as it did, a new dealership in Montreal last month after an eight-year absence from the Quebec market. Dealer principals Norman Hébert and Gad Bitton say they expect to sell between 25 and 30 cars per year, two-thirds of them Rolls-Royce Ghost models, which are the most affordable in the lineup. Prices for the Ghost starts at US$246,500 excluding tax.

“I certainly met enough people who are entrepreneurial at our launch event to satisfy me that we’ll do well in Quebec,” Rolls-Royce North America president David Archibald said in an interview. “Many of our customers will have a garage full [of vehicles]. They’ll have six cars or so and one of their harder decisions on the day is ‘Which car shall I drive today?’ ”

Still, there is “a lot of discretion involved where wealth is concerned,” said Louise Rémillard, a Montreal real estate broker and president of Profusion, an exclusive affiliate of Christie’s International. She notes that a significant portion of real estate transactions in Quebec happen privately, not through the public Multiple Listing Service. “People who have money here don’t shout it out loud.”

Ask an American how much his fancy house cost and he just might tell you. Ask a Quebecer and you’re likely to be greeted with stone silence.

In his 2006 book Éloge de la Richesse (In Praise of Wealth), Montreal journalist Alain Dubuc writes that Quebec has a significant “ideological blockage” in which its citizens are deeply suspicious of richness and rich people in general. He says one of the main reasons is a widespread conviction that when someone enriches himself, “someone else, somewhere else, gets screwed.”

Quebec faces serious threats, he concludes — from an aging population, from economic competition, but also from the paralysis of a conservative society that is showing a formidable resistance to change. The risk is not that it plunges into social and economic catastrophe, he writes, but rather into a kind of placid averageness as it gets outpaced by its neighbours.

“What we face is a progressive shrinking: An economy that rebounds less strongly than before, government finances with less and less wiggle room, and an imperceptible downward adjustment of our collective expectations in what could become a quiet mediocrity.”

If Friday's gains are anything to go by, investors are champing at the bit

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